Nairobi: The government has finally put in place an authority and a tribunal that will regulate trade and commerce practices in this country. The establishment of the Competition Authority, in place of the lacklustre Commission of Monopolies, will prevent and restrain industry giants from price-fixing and other monopolistic tendencies that have shut down competition over the years. The whole purpose of this move is to safeguard competition, which is key to any nation’s economic growth.
For years in this country, companies, both local and foreign, have been using unorthodox means to shut rivals from the markets simply because the Commission of Monopolies had little powers to institute investigations.
We have seen companies engage in misleading market conduct and this new law will put a stop to such tendencies or face litigation.
One of the highlights of the new Constitution was protection of consumer rights and this law has now put the structures needed to exercise those rights.
From now on, the authority, once constituted, can receive complaints from individuals, business entities, and consumer organizations and install discipline into competition.
It has become a norm for companies to undercut their rivals and push them off the cliff or enter into agreements to fix prices until a competitor gets out of business.
Markets cannot expand under such arm-twisting and back-stabbing.
The purpose of this new law is not to kill trade. It rather makes competition, however bruising, to have its set of rules akin to those that govern war.
It also regulates, or banishes cartels that emerge to stop others from entering the market.
This protects the consumers from exploitation and gives them a chance to complain.
To enforce these rules will require political will. We have watched mergers and acquisitions that were done with the sole aim of controlling markets and also rise of interlocking directorates where companies with common members compete against themselves - but purport to be independent of each other. This should be streamlined.
Again, the practice of price discrimination should also be quickly addressed to remove such unfair and deceptive acts from our terrain.
Competition when looked positively stimulates growth and leads to creativity. There will be an attempt to resist change. But that is inevitable. The basic doctrine behind this law is that markets can easily be distorted if they are not regulated through checks and balances. It also gives consumers powers to police efficiency of the products or service given.
This is healthy and we must borrow from the success of antitrust laws in the US where monopolies are always kept under check and where consumer organizations are encouraged to keep watch. That is why the new Competition Act should be read keenly. It matters.
* Editorial comment in Business Daily Africa